April 12, 2012 (Source: Trust.org) — China’s grip on the rare earths market is more fragile than it first appears. The minerals’ high prices are vulnerable too.
Establishing a new industry lobbying group is the latest twist in Beijing’s drive to shut dirty smelters. That may support prices near term, but miners elsewhere will be better placed as a smaller number of Chinese producers are held to higher environmental standards. As new mines come online outside the Middle Kingdom, greater competition should bring prices down.
China’s trading partners may be tempted to see its latest crackdown as a smokescreen for protectionism. Beijing has used concerns about the industry’s environmental side-effects to justify policies including strict export controls that arguably give domestic manufacturers an unfair advantage. But mining the silvery metals is a notorious source of toxic waste. Beijing has a legitimate reason to want to clean up production.
Lax environmental standards explain how China the country came to dominate the industry. Its miners kept expanding in the 1990s even as toxic waste concerns, and depressed prices, forced Western producers out of the business.
Now Chinese policymakers are much less tolerant of big polluters than they were a decade or two ago. Ultimately, tighter environmental controls in China give cause for celebration. Alongside the substantial health benefits, higher standards make it harder for Chinese miners to undercut their competitors. The result should be a more balanced long-term supply of an economically and strategically important resource.
Higher global prices have already enticed Western producers back into the business. Molycorp is ramping up production at California’s Mountain Pass mine, once the world’s biggest source of rare earths. Lynas, an Australian miner, is putting the finishing touches on a big new processing facility in Malaysia.
If Lynas can overcome some last-minute licensing hurdles, the projects together have the potential to add up to 30,000 tonnes per year of production, according to UBS. That’s roughly equal to China’s 2011 export target. With other new projects on the drawing board in Canada and Australia, Roskill, a metals consultancy, expects China’s share of global production to fall from 94 percent last year to just over 70 percent by 2015. That should drive today’s high prices down.
CONTEXT NEWS
– China set up a rare earth industry association on April 8, state media reported.
– The Asian giant accounts for more than 90 percent of global production of rare earth metals, used in products ranging from smartphones to sensitive military hardware and wind turbines.
– According to Reuters reports the more prized rare earths are trading at more than six times their 2009 prices and more than double domestic Chinese prices.
– The United States, European Union and Japan last month complained to the World Trade Organization about China’s restrictions on rare earth exports. Beijing says the curbs are necessary to preserve supplies and manage the environmental impact of rare earth mining.
– On April 9, the Western hemisphere’s only rare earths miner raised its estimate of reserves contained in a California mine, which was once the world’s biggest source of the metals. U.S.-based Molycorp said its Mountain Pass mine contained an estimated 2.94 billion pounds of rare earth oxide, compared with a previous estimate of 2.24 billion pounds – about 11 times today’s global annual demand.
How Does China’s Rare Earth Stand Impact the Precious Metal Market?
China’s rare earth stand has a significant impact on the precious metal market. As the largest producer, any restrictions or policies from China can cause fluctuations in supply and demand for precious metals. This affects pricing and availability, making it an important factor for investors and manufacturers.
How Will China’s Control of the Rare Earths Market Impact the Creation of the HREE Strategic Reserve?
China’s rare earth strategic reserve has the potential to greatly impact the creation of the HREE strategic reserve. With China controlling the majority of the global rare earth market, their strategic reserve could influence supply and demand dynamics, affecting the formation and management of the HREE strategic reserve.
How Does China’s Grip on the Rare Earths Market Affect the Accuracy of General Media Stories?
Understanding the ree story is crucial for accurate reporting on the rare earths market. China’s dominance in this industry allows them to control supply and prices, impacting the reliability of media stories. Without a comprehensive understanding of the ree story, the media may struggle to provide an accurate portrayal of the market.
Can Australia capitalize on China’s fragile grip on the rare earths market for missed opportunities?
With China’s rare earth monopoly in question, Australia’s rare earth elements could be a valuable asset. By leveraging its abundant reserves, Australia has the opportunity to become a major player in the market. Missed opportunities could be avoided with strategic planning and investment in infrastructure for rare earth extraction and processing.
What impact does China’s control over the rare earths market have on their behavior towards these metals?
China’s rare earth metals dominance has given them significant power in the market. This control allows China to influence prices and supply, affecting their behavior towards these metals. They can use this leverage to gain political and economic advantages on the global stage.